Emirates Integrated Telecommunications Company PJSC and its subsidiaries

Transcription

1 Emirates Integrated Telecommunications Company PJSC and its subsidiaries Condensed interim consolidated financial statements for the nine-month period ended 2017

2 Emirates Integrated Telecommunications Company PJSC and its subsidiaries Condensed interim consolidated financial statements Pages Report on review of condensed interim consolidated financial information 1 Condensed interim consolidated statement of financial position 2 Condensed interim consolidated statement of comprehensive income 3 Condensed interim consolidated statement of cash flows 4 Condensed interim consolidated statement of changes in equity

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5 Condensed interim consolidated statement of comprehensive income nine-month period ended 30 September three-month period ended 30 September Note Revenue 26 9,552,597 9,292,650 3,130,859 3,136,812 Interconnect and related costs (2,279,296) (2,176,660) (738,560) (723,823) Staff costs (735,293) (700,441) (239,377) (247,671) Product costs (601,056) (481,332) (187,840) (172,590) Network operation and maintenance (530,550) (463,279) (159,532) (165,684) Commission (338,633) (269,966) (95,317) (87,493) Outsourcing and contracting (309,496) (322,364) (96,498) (97,277) Telecommunication license and related fees (221,482) (259,407) (41,793) (89,118) Marketing (207,196) (214,712) (89,797) (53,482) Rent and utilities (88,238) (88,309) (33,786) (33,139) Other expenses 20 (338,933) (246,823) (118,424) (89,606) Other income 3,526 51,158 1,626 3, Earnings before interest, taxes, depreciation and amortisation (EBITDA) 3,905,950 4,120,515 1,331,561 1,380,146 Depreciation and impairment 4 (1,024,723) (984,426) (344,002) (327,591) Amortisation and impairment of intangible assets 5 (106,785) (171,128) (2,631) (63,833) Operating profit 2,774,442 2,964, , ,722 Finance income , ,309 38,961 34,239 Finance expense 21 (90,164) (83,090) (35,850) (28,134) Share of profit of investments in associates accounted for using equity method 6 7,517 1,878 2, Profit before royalty 2,815,899 2,986, , ,137 Royalty 22 (1,528,726) (1,603,292) (515,215) (537,899) Profit for the period 1,287,173 1,382, , , Other comprehensive income/(loss) Items that may be re classified subsequently to profit or loss Fair value changes on cash flow hedge 1,746 (19,845) 1,882 12, Other comprehensive income/(loss) for the period 1,746 (19,845) 1,882 12, Total comprehensive income for the period attributable entirely to shareholders of the Company 1,288,919 1,362, , ,937 =========== =========== =========== =========== Basic and diluted earnings per share (AED) The notes on pages 6 to 24 form an integral part of these condensed interim consolidated financial statements. (3)

6 Condensed interim consolidated statement of cash flows Cash flows from operating activities nine-month period ended Note Profit before royalty 2,815,899 2,986,058 Adjustments for: Depreciation and impairment 1,024, ,426 Amortisation and impairment of intangible assets 106, ,128 Provision for employees end of service benefits 25,653 32,530 Provision for impairment of trade and other receivables 205, ,464 Release of provision for impairment of trade receivables - (37,441) Finance income (124,104) (102,309) Interest expense 90,164 83,090 Unwinding of discount on asset retirement obligations 3,059 1,476 Share of profit of investments in associates (7,517) (1,878) Changes in working capital 24 (587,256) (727,574) Cash generated from operations 3,553,225 3,506,970 Royalty paid (2,087,574) (1,947,456) Payment of employees end of service benefits 15 (24,694) (10,501) Net cash generated from operating activities 1,440,957 1,549,013 Cash flows from investing activities Purchase of property, plant and equipment (1,100,051) (955,631) Purchase of intangible assets (164,914) (126,568) Purchase of additional investment (1,835) - Interest received 180,910 71,623 Margin on guarantees placed (8,393) (1,300) Short term investments released 2,100,000 1,215,000 Net cash from investing activities 1,005, ,124 Cash flows used in financing activities Proceeds from borrowings 21,306 28,164 Repayment of borrowings (779,799) (147,752) Decrease in balance due from founding shareholders - 4,063 Interest paid (83,607) (78,511) Dividend paid (951,910) (914,286) Net cash used in financing activities (1,794,010) (1,108,322) Net increase in cash and cash equivalents 652, ,815 Cash and cash equivalents at 1 January 228, ,136 Cash and cash equivalents at , ,951 Non-cash transaction Cancellation of treasury shares, reduction in share capital and reduction in share premium is a non-cash transaction. Details are provided in Note The notes on pages 6 to 24 form an integral part of these condensed interim consolidated financial statements. (4)

7 Condensed interim consolidated statement of changes in equity Share capital (Note 17) Share premium (Note 18) Other reserves, net of treasury shares (Note 19) Retained earnings Total AED 000 At 1 January ,571, ,504 1,987, ,919 7,818,656 Profit for the period ,382,766 1,382,766 Other comprehensive loss - - (19,845) - (19,845) Total 4,571, ,504 1,967,959 2,248,685 9,181,577 Transfer to statutory reserve ,277 (138,277) - Cash dividend paid - - (914,286) - (914,286) Proposed interim cash dividend * ,286 (594,286) - Transfer to cash dividend payable - - (594,286) - (594,286) Total transactions with shareholders recognised directly in equity - - (776,009) (732,563) (1,508,572) At ,571, ,504 1,191,950 1,516,122 7,673,005 At 1 January ,571, ,504 2,003, ,965 7,852,940 Profit for the period ,287,173 1,287,173 Other comprehensive income - - 1,746-1,746 Total 4,571, ,504 2,004,788 2,172,138 9,141,859 Cancellation of treasury shares (38,523) (161,172) 199, Transfer to statutory reserve ,717 (128,717) - Cash dividend paid - - (951,910) - (951,910) Proposed interim cash dividend * ,278 (589,278) - Transfer to cash dividend payable - - (589,278) - (589,278) Total transactions with shareholders recognised directly in equity (38,523) (161,172) (623,498) (717,995) (1,541,188) At ,532, ,332 1,381,290 1,454,143 7,600,671 *An interim cash dividend of AED 0.13 per share ( 2016: AED 0.13 per share) amounting to AED 589,278 thousand ( 2016: AED 594,286 thousand) is proposed. The notes on pages 6 to 24 form an integral part of these condensed interim consolidated financial statements. (5)

8 for the nine-month period ended General information Emirates Integrated Telecommunications Company PJSC (the Company ) is a public joint stock company with limited liability. The Company was incorporated according to Ministerial resolution No. 479 of 2005 issued on 28 December The Company was registered in the commercial register under No The principal address of the Company is P.O Box Dubai, United Arab Emirates (UAE). These condensed interim consolidated financial statements for the period ended 2017 include the financial statements of the Company and its subsidiaries (together the Group ). The Company s principal objective is to provide fixed, mobile, wholesale, broadcasting and associated telecommunication services in the UAE. In order to comply with the new provisions of the UAE Federal Law No. 2 of 2015 ("Companies Law"), the Company shareholders approved the amendments to its Articles of Association through a resolution at the General Meeting held on 20 June These amendments have been forwarded to the relevant authorities for final approvals. The Company has either directly or indirectly the following subsidiaries: Subsidiaries Principal activities Shareholding Country of incorporation EITC Investment Holdings Limited Holding investments in new business i.e content, media, data and value added services for telecommunications 100% 100% UAE Telco Operations FZ-LLC Telecommunication and network 100% 100% UAE Smart Dubai Platform Project Company LLC Software development, IT infrastructure, public networking and computer systems housing services 100% 100% UAE 2 Basis of preparation i Statement of compliance These condensed interim consolidated financial statements have been prepared in accordance with the requirements of IAS 34 Interim Financial Reporting. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended The condensed interim consolidated financial statements do not include all the information required for full annual consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS). (6)

9 2 Basis of preparation (continued) ii (a) New standards, amendments and interpretations Standards, amendments and interpretations adopted during the financial year beginning 1 January 2017 but having no material impact to the Group s financial statements. IAS 7, Statement of cash flows on the disclosure initiative (effective from 1 January 2017). There is no material impact of the above amendments on the condensed consolidated interim financial information of the Group. (b) New standards and amendments issued but not effective until financial years beginning after 1 January 2017 and not early adopted by the Group. IFRS 15, Revenue from contracts with customers (effective from 1 January 2018); IFRS 9, Financial instruments: Classification and Measurement (effective from 1 January 2018); and IFRS 16, Leases (effective from 1 January 2019). IFRS 15 'Revenue from contracts with customers', establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. This standard is effective for annual periods beginning on or after 1 January 2018 while earlier application is permitted. The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This revenue standard will impact telecommunication entities with certain changes having the potential for the greatest impact, such as: - Additional revenue will be allocated to discounted or free products provided at the beginning of a service period due to the elimination of the contingent revenue cap, and changes to and restrictions in the use of the residual method currently applied by the companies; - Customer acquisition costs (activation fees, SIM card fee, certain contract fulfilment costs etc.) will be deferred over the period of the contract; and - Revenue from postpaid bundles will be affected, in which revenue related to handset component will be recognised upfront. The Group is in the final stages of assessing the impact of this new revenue standard. IFRS 9 Financial Instruments: In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces requirements for classification and measurement, impairment and hedge accounting. The de-recognition rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement and have not been changed. The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group s disclosures about its financial instruments particularly in the year of the adoption of the new standard. (7)

10 2 Basis of preparation (continued) ii New standards, amendments and interpretations (continued) (b) New standards and amendments issued but not effective until financial years beginning after 1 January 2017 and not early adopted by the Group (continued) IFRS 9 is effective for annual periods beginning on or after 1 January The Group is in the final stages of assessing the impact of this new Financial Instruments standard. The Group is also in the process of assessing the impact of new Leases standard. The Group has plans in place for adhering to the above new standards and amendments to published standards or IFRIC interpretations issued but not yet effective for the Group s financial year beginning on 1 January There are no other applicable new standards and amendments to published standards or IFRIC interpretations that have been issued but are not effective for the first time for the Group s financial year beginning on 1 January 2017 that would be expected to have a material impact on the condensed consolidated interim financial information of the Group. iii Basis of consolidation A subsidiary is an entity controlled by the Company. The financial statements of a subsidiary are included in the condensed interim consolidated financial statements from the date that control commences until the date that control ceases. iv Basis of measurement These condensed interim consolidated financial statements have been prepared under the historical cost convention except for an available-for-sale financial asset and derivative financial instruments that have been measured at fair value. v Functional and presentation currency These condensed interim consolidated financial statements are presented in United Arab Emirates Dirham ( AED ) rounded to the nearest thousand except when otherwise stated. This is the Group s functional and presentation currency. vi Earnings per share The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, excluding treasury shares. Diluted EPS is calculated by adjusting the weighted average number of equity shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group does not have any dilutive potential ordinary shares. (8)

11 2 Basis of preparation (continued) vii Use of estimates and judgments The preparation of these condensed interim consolidated financial statements, in conformity with IFRS, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Judgements made by management in the application of IFRS that have significant effect on these condensed interim consolidated financial statements and estimates with a risk of material adjustment in the next year mainly comprise of residual value and useful lives of items of property, plant and equipment and intangible assets, key assumptions used in discounted cash flow projections for goodwill impairment test, provision for impairment of trade receivables, provision for asset retirement obligation and calculation of federal royalty. 3 Significant accounting policies The same accounting policies and methods of computation have been followed in these condensed interim consolidated financial statements as compared with the Group s recent annual audited consolidated financial statements as at and for the year ended There are no changes in the accounting policies during the nine-month period ended (9)

12 4 Property, plant and equipment Buildings Plant and equipment Furniture and fixtures Motor vehicles Capital work in progress Total Cost At 1 January ,960 15,188, ,572 1,419 1,012,841 16,525,682 Additions ,283 17, , ,678 Addition: asset retirement obligations - 6, ,495 Transfers (3,814) 740,030 6,055 - (742,271) - Disposals / write-off - (20,452) (824) - (747) (22,023) At ,941 16,206, ,150 1, ,076 17,437,832 Depreciation/impairment At 1 January ,207 7,802, ,579 1,385 5,956 8,076,485 Depreciation/impairment 1,678 1,009,703 11, ,999 1,024,723 charge for the period Disposals / write-off - (18,724) (693) - (1,062) (20,479) At ,885 8,793, ,212 1,402 6,893 9,080,729 Net book value At ,056 7,412,909 39, ,183 8,357,103 At ,753 7,386,532 27, ,006,885 8,449,197 The carrying amount of the Group s buildings include a nominal amount of AED 1 ( 2016: AED 1) in relation to land granted to the Group by the UAE Government. (10)

13 5 Intangible assets Goodwill 549, ,050 Other intangible assets 592, ,419 1,141,423 1,173,469 Goodwill The Group acquired the business and assets of three wholly owned subsidiaries/divisions of Tecom Investments FZ LLC with effect from Goodwill represents the excess of purchase consideration paid over the fair value of net assets acquired. Carrying amount of goodwill allocated to each of the Cash Generating Units ( CGU ) is as follows: Broadcasting operations 135, ,830 Fixed line business 413, , , ,050 The Group tests goodwill for impairment annually. The recoverable amount of the Cash Generating Units ( CGU ) is determined using the Discounted Cash Flow method based on the five year business plan approved by the Board of Directors. The latest impairment testing was performed as at As at 2016, the estimated recoverable amount of the broadcasting CGU exceeded the carrying amount of its net assets including goodwill, by approximately 50% and that of the fixed line business exceeded its carrying amount by approximately 170%. The key assumptions for the value-in-use calculations at 2016 include: - 5 year revenue growth projections for the fixed line business and broadcasting operations; - a pre-tax discount rate of 9.42% based on the historical industry average weighted-average cost of capital; - maintenance capital expenditure projections allowing for replacement of existing infrastructure at the end of its useful life; and - terminal growth rate of 3% for the fixed line and broadcasting businesses, determined based on management s estimate of the long term compound EBITDA growth rate, consistent with the assumption that a market participant would make. (11)

14 5 Intangible assets (continued) Other intangible assets The net book value of the other intangible assets is as follows: Total IT software Telecommunications license fees Indefeasible right of use Total AED 000 Opening balance 507,926 56,878 59, , ,911 Additions during the period/year 74, , ,820 Amortisation/impairment for the period/year (92,007) (4,656) (10,122) (106,785) (208,225) Adjustments (122,087) Closing balance 490,658 52,222 49, , ,419 IT software is split between software in use of AED 195,134 thousands ( 2016: AED 169,122 thousands) and capital work in progress of AED 295,524 thousands ( 2016: AED 338,804 thousands). During the period, AED 72,985 thousand was transferred from capital works in progress to software in use. Telecommunication license fees represent the fees charged by the Telecommunications Regulatory Authority to the Group to grant the license to operate as a telecommunications service provider in the UAE. The fees are being amortised on a straight-line basis over a period of 20 years which is the term of the license, from the date of granting the license. Indefeasible right of use represent the fees paid to a telecom operator to obtain rights to use Indoor Building Solutions relating to certain sites in the UAE. The fees are amortised on a straight line basis over 10 years. Also included in the balance is an amount charged by an operator of a fibre-optic cable system for the right to use its submarine fibre-optic circuits and cable system. The fees are amortised on a straightline basis over a period of 15 years from the date of activation of the cable system. 6 Investments in associates Khazna Data Center Limited The Group has 26% ownership shares in Khazna Data Center Limited ( the Associate ), a limited liability company established in the Masdar City Free Zone, in the Emirate of Abu Dhabi. The business of the Associate is providing wholesale data centre services. Dubai Smart City Accelerator FZCO During the period 2017, the Group acquired 23.5% shares in Dubai Smart City Accelerator FZCO ( the Associate ), a Free Zone Company with limited liability established in Dubai Silicon Oasis Free Zone, in the Emirate of Dubai. The business of the Associate is to run accelerator programs with the purpose of sourcing innovation and technology applicable to the Smart City Industry. (12)

15 6 Investments in associates (continued) Opening balance 113, ,867 *Investment during the period/year 1,835 - Share of profit for the period/year 7,517 3,068 Closing balance 123, ,935 *The investment during the period 2017, represents payment made for acquisition of 23.5% shares in Dubai Smart City Accelerator FZCO. 7 Available-for-sale financial asset Unlisted shares Anghami 18,368 18,368 Available-for-sale financial asset represents, 4.8% shares in Anghami, a Cayman Islands exempted company registered in the Cayman Islands (unlisted company). The company is involved in the provision of media related content. The Group classified the investment as available-for-sale financial asset at the date of acquisition. 8 Derivative financial instruments The Group has the following derivative financial instruments: Interest rate swap contracts cash flow hedges 8,026 6,280 (13)

16 9 7Trade and other receivables Trade receivables 2,132,645 1,812,689 Due from other telecommunications operators 589, ,408 Less: payable balances set off where right to set off exists (533,411) (277,232) Less: provision for impairment of trade receivables and due from other telecommunications operators (596,670) (439,793) Trade and other receivables, net (Note 9.1) 1,592,061 1,469,072 Prepayments 335, ,246 Advances to suppliers 147, ,715 Other receivables 71, ,857 Total trade and other receivables 2,146,377 2,000,890 Non-current 64,609 32,373 Current 2,081,768 1,968,517 2,146,377 2,000, At 2017, AED 961,793 thousands ( 2016: AED 658,671 thousand) of trade and other receivables are more than 180 days overdue against which impairment provisions of AED 442,803 thousand ( 2016: AED 342,351 thousand) has been recorded. 9.2 The movement in the provision for impairment of trade and unbilled revenue receivables and due from other telecommunications operators is as follows: Opening balance 439, ,797 Provision for impairment during the period/year 205, ,729 Release of provision for impairment during the period/year - (37,441) Write-off during the period/year (48,942) (140,292) Closing balance 596, ,793 (14)

17 10 Related party balances and transactions Related parties comprise the shareholders of the Company, entities under common shareholding, its directors, key management personnel and entities over which they exercise control, joint control or significant influence. The founding shareholders mentioned in the note are Emirates Investment Authority, Mubadala Development Company and Emirates Communications & Technology Company LLC. Transactions with related parties are on terms and conditions approved by the Group s management or by the Board of Directors. Related party balances Due from a related party Axiom Telecom LLC (Entity under common shareholding) 167, , Due to related parties Tecom Investments FZ LLC (Entity under common shareholding) 10,834 6,940 Khazna Data Center Limited (Associate) 13,141 5, ,975 12,736 ========== ========== Related party transactions All transactions with related parties referred to below are carried out at normal commercial terms and conditions and at market rates. The following table reflects the gross value of transactions with related parties. nine-month period ended Entities under common shareholding Tecom Investments FZ LLC: - Office rent and services 34,127 36,765 - Infrastructure cost 1,202 14,703 Axiom Telecom LLC Authorised distributor net sales 1,420,785 1,487,825 Injazat Data Systems LLC Data centre rent and services 1,832 7,021 Associate Khazna Data Center rent and services 65,752 49,480 Dubai Smart City Accelerator FZCO- acquisition of shares 1,835 - Key management compensation Short term employee benefits 25,096 23,961 Employees end of service benefits Post-employment benefits 1,650 1,067 Long term incentives 10,598 7,774 38,008 33,547 (15)

18 10 Related party balances and transactions (continued) The fee paid to Board of Directors during the period was AED 9,150 thousand ( 2016: AED 7,497 thousand). During the period, no loan has been provided to Directors, their spouses, children and relatives of the second degree and any corporates in which they own 20% or more. 11 Short term investments Short term investments 4,050,000 6,150,000 Short term investments represent bank deposits with maturity periods exceeding 3 months from the date of acquisition. Management does not have any intention to hold these short term investments for more than 1 year from the reporting date. 12 Cash and bank balances For the purposes of the condensed interim consolidated statement of cash flows, cash and cash equivalents comprise: Cash at bank (on deposit and call accounts) 899, ,880 Cash on hand , ,498 Less: margin on guarantees (19,186) (10,793) Cash and cash equivalents 881, ,705 (16)

19 13 Trade and other payables Trade payables and accruals 1,817,539 2,027,736 Due to other telecommunications operators 1,191,419 1,006,089 Less: receivable balances set off where right to set off exists (533,411) (277,232) Accrued royalty (Note 22) 1,545,526 2,110,809 Dividend payable 589,278 - Deferred revenue 505, ,594 Customer deposits 128, ,558 Employee benefit accruals 101, ,009 Retention payable 15,957 13,600 Others 516 1,047 5,362,637 5,838, Borrowings Bank borrowings 3,581,662 4,297,995 Buyer credit arrangements 39,674 81,834 3,621,336 4,379,829 Less: Current portion of borrowings (1,461,318) (783,473) 2,160,018 3,596,356 The details of borrowings are as follows: Term loans Currency Nominal interest rate Year of maturity 1 January 2017 Opening balance 2017 Drawn Settled Closing Balance Unsecured term loan 1 USD LIBOR+0.95% ,644,920 - (440,820) 2,204,100 Unsecured term loan 2 USD LIBOR+0.95% ,102,050 - (183,675) 918,375 Unsecured term loan 3 USD LIBOR+0.95% ,025 - (91,838) 459,187 Buyer credit arrangements 4,297,995 - (716,333) 3,581,662 Buyer credit arrangement 1 USD LIBOR+1.20% ,793 - (59,793) - Buyer credit arrangement 2 USD Nil ,041 21,306 (3,673) 39,674 81,834 21,306 (63,466) 39,674 (17)

20 15 Provision for employees end of service benefits 30 September Opening balance 225, ,887 Current service cost for the period/year 25,653 33,906 Interest cost for the period/year 6,739 6,900 Benefits paid during the period/year (24,694) (15,318) Actuarial gain for the period/year recognised in other comprehensive income - 13,252 Closing balance 233, , Other provisions Asset retirement obligations In the course of the Group s activities a number of sites and other commercial premises are utilised which are expected to have costs associated with exiting and ceasing their use. The associated cash outflows are substantially expected to occur at the dates of exit of the assets to which they relate, which are long-term in nature, primarily in period up to 10 years from when the asset is brought into use. Opening balance 102,021 88,318 Additions during the period/year 6,495 10,160 Unwinding of discount during the period/year 3,059 3,543 Closing balance 111, , Share capital No of shares No of shares Authorised, issued and fully paid up shares (par value AED 1 each) 4,532,905,989 4,571,428, Treasury shares: During 2016, the Group bought back 38,522,582 ordinary shares from founding shareholders under Executive Share Option Plan ( ESOP ) at a total consideration of AED 199,599 thousand. The cancellation was approved by the shareholders on 11 January Related amendments to Articles of Association have been forwarded to the relevant authorities for final approvals (Note 19.3). (18)

21 18 Share premium Premium on issue of common share capital 232, ,504 (19)

22 19 Other reserves, net of treasury shares Share based payment reserve Statutory reserve (Note 19.1) Hedge reserve (Note 19.2) Proposed dividend Treasury shares (Note 19.3) Total At 1 January ,194 1,069,291 3, ,286-1,987,804 Transfer to statutory reserve - 138, ,277 Fair value changes on cash flow hedge - - (19,845) - - (19,845) Cash dividend paid (914,286) - (914,286) Proposed interim cash dividend , ,286 Transfer to cash dividend payable (594,286) - (594,286) At ,194 1,207,568 (16,812) - - 1,191,950 At 1 January ,244,547 6, ,910 (199,695) 2,003,042 Transfer to statutory reserve - 128, ,717 Fair value changes on cash flow hedge - - 1, ,746 Cash dividend paid (951,910) - (951,910) Proposed interim cash dividend , ,278 Transfer to cash dividend payable (589,278) - (589,278) Cancellation of treasury shares , ,695 At ,373,264 8, ,381, In accordance with the UAE Federal Law No. 2 of 2015 ("Companies Law") and the Company's Articles of Association, 10% of the net profit is required to be transferred annually to a non-distributable statutory reserve. Such transfers are required to be made until the balance of the statutory reserve equals one half of the Company's paid up share capital Hedge reserve is related to derivative financial instruments (Note 8) Treasury shares represent ordinary shares bought back from founding shareholders under Executive Share Option Plan ( ESOP ) and the cancellation of these treasury shares were approved by the shareholders on 11 January Related amendments to Articles of Association have been forwarded to the relevant authorities for final approvals (Note 17.1). (20)

23 20 Other expenses nine-month period ended Provision for impairment of trade receivables 208, ,464 Consulting 58,486 36,692 Office expenses 50,469 54,056 Others 21,060 38, , , Finance income and expenses nine-month period ended Finance income Interest income 124, ,309 Finance expense Interest expense 94,752 82,761 Exchange (gain)/loss (4,588) ,164 83, Royalty The royalty rates payable to the UAE Ministry of Finance for the period from 2017 to 2021 are 15% on regulated revenue and 30% on regulated profit after deducting royalty on regulated revenue. nine-month period ended Total revenue for the period (Note 26) 9,552,597 9,292,650 Broadcasting revenue for the period (Note 26) (118,541) (128,615) Other allowable deductions (2,708,042) (2,271,526) Total adjusted revenue 6,726,014 6,892,509 (21)

24 22 Royalty (continued) Movement in the royalty accruals is as follows: nine-month period ended Profit before royalty 2,815,899 2,986,058 Allowable deductions (78,657) (54,130) Total regulated profit 2,737,242 2,931,928 Charge for royalty: 15% (2016: 15%) of the total adjusted revenue plus 30% (2016: 30%) of net regulated profit for the year before distribution after deducting 15% (2016: 15%) of the total adjusted revenue. 1,527,404 1,603,292 Adjustments to charge (5,113) - 1,522,291 1,603,292 Royalty reimbursement (net) 6,435-1,528,726 1,603,292 Opening balance 2,110,809 1,952,569 Payment made during the period/year (2,087,574) (1,947,457) Charge for the period/year 1,522,291 2,105,697 Closing balance 1,545,526 2,110, Earnings per share nine-month period ended Profit for the period (AED 000) 1,287,173 1,382,766 Weighted average number of shares ( 000) 4,532,906 4,571,429 Basic and diluted earnings per share (AED) (22)

25 24 Changes in working capital nine-month period ended Change in: Inventories (1,042) 50,421 Trade and other receivables (408,112) (427,980) Trade and other payables (241,729) (334,095) Due from a related party 52,388 8,398 Due to related parties 11,239 (24,318) Net changes in working capital (587,256) (727,574) 25 Contingent liabilities and commitments The Group has outstanding capital commitments and bank guarantees amounting to AED 993,104 thousand and AED 19,186 thousand, respectively ( 2016: AED 784,634 thousand and AED 10,793 thousand, respectively). Bank guarantees are secured against margin of AED 19,186 thousand ( 2016: AED 10,793 thousand) (Note 12). 26 Segment analysis 2017 Mobile Fixed Wholesale Broadcasting Total AED 000 Segment revenue 7,100,050 1,707, , ,541 9,552,597 Segment contribution 4,771,079 1,453,144 67,346 41,281 6,332,850 Unallocated costs (3,561,934) Finance income and expenses, other income, share of profit of investment in an associate 44,983 Profit before royalty 2,815,899 Royalty (1,528,726) Profit for the period 1,287,173 (23)

26 26 Segment analysis (continued) 2016 Mobile Fixed Wholesale Broadcasting Total AED 000 Segment revenue 7,025,123 1,597, , ,615 9,292,650 Segment contribution 4,872,291 1,352,557 88,448 50,647 6,363,943 Unallocated costs (3,450,140) Finance income and expenses, other income, share of profit of investment in as associate 72,255 Profit before royalty 2,986,058 Royalty (1,603,292) Profit for the period 1,382,766 The Group s assets and liabilities have not been identified to any of the reportable segments as the majority of the operating fixed assets are fully integrated between segments. The Group believes that it is not practical to provide segment disclosure relating to total assets and liabilities since a meaningful segregation of available data is not feasible. In order to conform with current period presentation, the comparative figures have been regrouped. Such regrouping did not affect the previously reported profit for the period, total comprehensive income for the period or total equity. (24)